1. home and garden

Council or Housing Association tenants
Want
to make
your
home
your
own?
Find out if this could be the
right time to consider buying
Your
Right
to Buy
Contents
Why you might
like to buy
Why you might like to buy?
3
Do you have the Right to Buy?
4
What discount could you get?
6
Can you afford it?
9
Other costs of buying a home
Working out the costs
Home ownership provides a special sense of pride.
It would give you more freedom to make the changes
you want to make to your home, and to move when
and where you want to – for example, to take up a
new job in another area, or take the next step on
the property ladder.
Buying your home is a big decision for you and
your family. The responsibilities, costs and financial
commitments that ownership brings need to be
thought about carefully, so you should always seek
impartial advice before buying.
10
14-15
Step by step guide
16-17
Guide to application form
18-19
Useful contacts
Now might be your best opportunity to become a
homeowner. You may be eligible for a discount of up
to £77,000, or up to £102,700 if you live in London.*
Your home could be a valuable asset for you and your
family and an investment for the future. This could be
your first important step on the property ladder.
With the opportunity for bigger discounts available
now, this could be the perfect time to decide if it’s
the right choice for you.
This booklet sets out the main information you need
to get you started, the questions you should ask, how
to take the next steps, and useful contacts for free,
unbiased advice and information.
20
Your
Right
to Buy
2
*This amount will increase with the rate of inflation in April every year.
3
Do you
have the
Right to Buy?
You could be eligible for
a Right to Buy discount if
You are a council tenant
OR
If you were living in your home when it was transferred from the council to another
landlord, like a housing association, you may have a ‘Preserved’ Right to Buy.
You were a council tenant when
your home was transferred
to your current landlord
If so, you could be eligible to buy your home in the same way as if you were still
a council tenant. If not, you may still be able to buy your home at a discount.
You have been a public sector
tenant for at least 5 years
If you have been a tenant for 5 or more years (it doesn’t have to be five years in
a row) you could qualify to buy the home you currently live in. It must be your only
or main home.
You don’t live in sheltered housing
or other housing particularly suitable
for elderly or disabled people
There are some homes that you may not be able to buy under the scheme.
Check this out with your landlord if you are not sure.
Your home is not due to be
demolished
You don’t have any legal
problems with debt
This could include if you are an un-discharged bankrupt, have a bankruptcy petition
pending against you, or have obtained a debt relief order.
You don’t have any outstanding
possession orders
You cannot buy your home if a court makes a possession order which says that you
must leave your home (usually made because you have not paid your rent, or have
breached the terms of your tenancy agreement in some other way).
If you can answer ‘yes’ to these
statements, you are probably eligible
but your landlord will need to confirm
this. See ‘Right to Buy – step by step
guide’ flowchart on page 16.
You don’t have to do it alone
You can make a joint application. So if you’re eligible, you might be able to buy
your home with:
• Someone who shares your tenancy.
• Your spouse or civil partner.
• Up to 3 family members who’ve lived with you for the past 12 months.
They don’t have to be on your tenancy agreement but it must be their main home.
4
5
You
may qualify
for an
even bigger
discount
What discount could you get?
The longer you have been a tenant, the bigger the discount you get off
the market value of your home, up to a maximum discount of £77,000
(£102,700 if you live in London).
6
House
Flat
Discounts start at 35% for 5 years’
tenancy. Add 1% for each extra year of
tenancy up to 70% or the cash maximum,
whichever is lower.
Discounts start at 50% for 5 years’ tenancy.
Add 2% for each extra year of tenancy up
to 70% or the cash maximum, whichever is
lower.
(e.g. 10 years tenancy = 40%,
20 years = 50%)
(e.g. 10 years tenancy = 60% discount,
15 years = 70%)
Buying a house
Example 1
Buying a flat
Example 1
Current house value
£120,000
Current flat value
£100,000
Years as a tenant
10 years
Years as a tenant
10 years
Eligible discount
(35% + 1% for each
year over 5 years)
40%
Eligible discount
(50% + 2% for each
year over 5 years)
60%
Discount value
£48,000
Discount value
£60,000
Price you pay for house
(£120,000 less £48,000)
£72,000
Price you pay for flat
(£100,000 less £60,000)
£40,000
Buying a house
Example 2
Current house value
Buying a flat
Example 2 (London)
£230,000
Current flat value
£270,000
Years as a tenant
20 years
Years as a tenant
10 years
Eligible discount
(35% + 1% for each year
over 5 years)
50%
Eligible discount
(50% + 2% for each
year over 5 years)
60%
Discount value
50% discount in this example
is £115,000, which is above
the cash maximum
£77,000
Discount value
60% discount in this example
is £162,000, which is above
the cash maximum
£102,700
Price you pay for house
(£230,000 less £77,000)
£153,000
Price you pay for flat
(£270,000 less £102,700)
£167,300
Discount levels for houses and flats start at 5 years of eligible tenancy,
increasing every year up to a maximum of 70% of the property value.
From 21 July 2014, the maximum percentage discount for a house increased to 70%
(in line with flats) and the maximum cash cap will increase in April every year in line
with inflation.
See our website for a handy Right to Buy Calculator. It’ll help you work out the
discount you could receive.
You might get a slightly lower discount if you previously purchased through Right to Buy
on another home or if your landlord has spent some money on improving your home.
You could also check out local estate agents and property websites to get a rough
idea of what your property could be worth.
If you have made improvements to your home, make sure you inform your landlord
(as part of the application form) so that they can reflect this in the valuation.
7
Home
ownership
comes
a
step
closer
Can you afford it?
For most people, buying a home is the biggest investment they will ever
make. It’s an exciting time, but there is a lot to think about.
You need to look at all the costs involved (not just mortgage repayments)
and work out if you can afford it not only now, but in the future too,
when your circumstances may change. And bear in mind that house
prices could go down in future as well as up.
It’s a good idea to look into the costs of home ownership as early
as possible, before you get too far into the Right to Buy process.
You are responsible for how you finance your Right to Buy – your
landlord can’t arrange this for you.
This section provides an overview of the costs as well as where you
can get more information and free, unbiased advice. There’s a checklist
on pages 14 and 15 that can help get you started.
Mortgage or loan
How much can you borrow?
You are likely to need a loan or mortgage,
which you would pay back with interest,
usually in monthly payments. The interest
rate will be in the mortgage deal that you
agree with your lender (usually a bank or
building society) and can change over time.
This depends on your personal
circumstances, such as your income,
your outgoings, whether you’re buying
alone or with someone else.
Remember that interest rates could go up
or down in future which will mean the
money you will pay back each month could
change significantly.
You agree with the lender how long
you need the mortgage for and whether
you can afford the monthly payments.
When deciding the period your mortgage
will be paid over, remember that when you
retire this could affect your ability to afford
mortgage repayments.
The type of property you live in can also
affect whether you can get a mortgage
– for example some lenders won’t lend
money on a flat in a high-rise block.
Even if you don’t need a mortgage yourself,
it’s worth checking whether lenders are
willing to give mortgages on the type
of property you are buying. You may
want to sell in the future to someone
who does need a mortgage.
8
9
Finding the best option for you
There are different mortgage options
available from different lenders. For
example, some will treat your Right
to Buy discount as your deposit, while
others will not.
It’s worth shopping around to compare the
deals available to you, and get impartial
advice before making up your mind. The
Money Advice Service is a good place to
start – they provide free, unbiased advice.
You could take a look at comparison sites
and online calculators to help you get
an idea of costs. You could also talk to a
bank, building society, mortgage broker or
an independent financial adviser (IFA). Some
brokers and advisers charge for their services.
Ask before appointing them and whoever
you speak to, make sure they are regulated
by the Financial Conduct Authority (FCA).
Many lenders will also charge a fee to set
up a loan or mortgage. Make sure that
you understand the terms and all the costs
involved before you commit to anything.
Check out carefully any person or
company offering to help you buy your
home as some of them may charge a fee.
The company may be offering a deal
which is far better for them than for you.
Checklist
• Shop around.
• Get advice.
• Check all the costs upfront (the cheapest quote may not be the best one for you).
• Check out carefully anyone offering to help.
Other costs of buying a home
There are some one-off costs when buying your home, as well as ongoing costs. Costs
below are correct at time of publication and are only provided as a guide. See our
‘useful contacts’ on page 20 for more information.
One-off costs
Mortgage advice
Legal fees
You may choose to get advice from
an independent financial adviser or
mortgage broker.
You will need to hire a solicitor or other
licensed conveyancer for the legal aspects
of your purchase (searches, land registry
fees, deeds etc.).
Costs vary and may be a set fee
or percentage of the loan.
Survey
Stamp duty
You may want to get an independent
survey done. This will highlight any
problems (such as repairs) you’ll need
to know about before you buy.
This is a one-off tax you pay when you
buy a property. The amount is based on a
percentage of the purchase price and varies
according to the property value. Stamp duty
does not apply to properties under a certain
value (currently £125,000).
Costs can vary depending on the type
of survey. Typically they start at around
£250 for a basic valuation survey.
10
Costs can vary. Typically £500-£750.
Things
to consider
before
you buy
11
Ongoing costs
When you buy your home, you take on
some ongoing costs and responsibilities
that you might not have as a tenant.
These include:
Maintenance and repairs
As a homeowner, your landlord will no
longer organise repairs to your home.
You will need to organise and pay for
these yourself. This could include electrical
and plumbing jobs through to more
expensive repairs such as a new boiler
or repairing your roof.
It’s a good idea to set aside some money
each month for maintenance and repairs.
Be aware that you may need permission
for some changes (such as planning
permission for an extension) so check
before you get started.
Service charges when buying a flat
or leasehold house
Where to get help if you’re thinking
of buying a leasehold property
Flats (and some houses) are leasehold
properties. When you buy a leasehold
property, the freeholder (your current
landlord) will still be responsible for
maintaining the building and the
surrounding area (communal areas)
– as defined in your lease.
It’s worth talking to local leaseholders to
learn about their experience of service
charges in your area.
As a leaseholder, you will pay your share of
these costs – known as the ‘service charge’.
When major repairs and maintenance are
needed in your block or estate, you’ll have
to pay a share of the costs too.
Insurance
This can be several thousands of pounds
should, for example, a new lift or new
windows be needed.
You are protected from unexpected costs
for the first 5 years. When you buy, your
landlord must give you an estimate of your
service charges for this period (see step
4 on page 17). They can only increase this
amount to take account of inflation – even
if something unexpected needs doing.
After 5 years, the service charge can rise
to reflect actual costs. Your landlord must
consult with you before starting any
major works. Before you buy, ask about
any long-term plans for repairs, works
or improvements to your block of flats
or surrounding area.
Free information and advice is available
from the Leasehold Advisory Service.
You’ll find their contact details on page 20.
You may already have insurance for the
contents of your home. As a homeowner
you will also need to insure the building
(if you are a leaseholder you will pay your
share of this cost).
You may also want (or be required by
your lender) to get income protection
or life insurance in case anything happens
to you while you’re paying off your
mortgage or loan.
Other considerations
As a homeowner you will not be eligible
for housing benefit.
Selling or transferring
your home later
Once you buy your home through the Right
to Buy, you can sell it whenever you want.
But there are some things you should be
aware of.
If you sell within 10 years:
you first have to ask your former landlord
if they want to buy your home back, at
market value. If they say ‘no’ then you
can sell it on the open market.
In addition:
If you sell within 5 years:
you will usually have to repay some or all
of the Right to Buy discount – the amount
depends on the price you sell at and how
long you have been the owner.
This also applies if you agree to transfer
ownership to somebody else.
If you live in a rural area:
you may only be allowed to sell your home
to somebody who lives or works locally.
Ask your landlord about this.
Your home could be at risk if you aren’t
able to keep up your mortgage or loan
payments.
Home improvements for leaseholders
You may need permission from the
freeholder (your current landlord) to
make certain changes to your property.
This should be set out in your lease
– check it carefully with your solicitor
before you sign it.
The same rules apply to all leases (whether
it’s a council or a private property).
Checklist
• Check if you are buying a leasehold
property and look into the costs.
• Work out your monthly outgoings.
Don’t forget to include all your
living costs, such as food, clothes etc.
• Set aside some money for repairs.
• Think about what you’ll do if things
change in the future.
• Fill out the table on pages 14 and 15.
12
13
Working out the costs
Being a homeowner can bring many
benefits, but it also brings important
responsibilities. Use this section to help you
work out the costs, benefits and drawbacks
of home ownership for you. Fill out the
table below to help you work out your
Advantages of buying
Advantages of renting
Possible drawbacks of buying
Possible drawbacks of renting
current monthly outgoings as a tenant,
and compare that with the costs of being
a homeowner. When working out what
you can afford, it’s important to factor in
all of your outgoings, such as food, clothes,
utility bills, phone, car etc.
Compare your outgoings to your household income.
One-off costs when you buy (see page 10 for details)
Legal fees
£
Stamp duty
£
Survey fees
£
Other costs
£
Income
Now (tenant)
Homeowner
Wages
£
£
Housing benefit
£
n/a
Other income (benefits etc)
£
£
Total
£
£
Ongoing costs (monthly)
Now (tenant)
Homeowner
Mortgage repayments
n/a
£
Rent
£
n/a
Council tax
£
£
Utility bills
(water, electricity, gas, telephone, etc)
£
£
Insurance (buildings and contents)
£ Contents only
£
Life assurance and illness cover
£
£
Internal upkeep/maintenance
(repairs to heating system, DIY etc.)
£
£
Total
14
Major repairs / improvements
n/a
£
Service charges (if applicable)
£
£
Other costs (general living expenses
such as food, going out, clothes etc.)
£
£
Total
£
£
Now (tenant)
Homeowner
Total monthly income
£
£
Less monthly outgoings
£
£
Your money left over each month
£
£
Summary
The Money Advice Service has a range of tips and tools to help you budget and work out
what you can afford. See page 20 for contact details.
15
Right to Buy – step by step guide
If you’re eligible for the Right to Buy discount you could be on your way
to owning your home. Here are the six key steps you need to follow.
1
2
Check eligibility, Fill in an
work out the
application
costs and get
form
Ask your landlord for an
advice
Once you’ve checked your
eligibility (see page 4) it’s a
good idea to look into the
costs of home ownership as
early as possible, so you have
an idea of what it might cost
and what you can afford
before you get too far into
the process.
application form (RTB1)
or download one from
our website at:
www.communities.gov.uk/
righttobuy.
3
Confirm
eligibility
Your landlord has up to 4
weeks to reply confirming
whether you have the Right
to Buy.
(or 8 weeks if you have been
with your current landlord
for less than 5 years).
Fill it in and send it to
your landlord.*
*See pages 18 and 19 for
information about the
details you will need to
have to hand before you
fill in your application form.
5
Receive an offer Over to you
Your landlord then has up to
– mortgage,
8 weeks to send you an offer
survey...
notice for a house or up to
12 weeks for a flat. This offer
and get advice
notice, which is known as a
S125 notice, sets out:
•their valuation of your
property*, your discount,
the price you’ll pay.
•any structural problems
they know about.
•any terms and conditions.
Go to page 14 to get started.
You may also want to speak
to a Right to Buy Adviser for
free, impartial advice. See
page 20 for details.
4
For leasehold properties only,
the S125 offer notice will also
include an estimate of the
service charges that you will
need to pay over the next
5 years (see page 12).
You have up to 12 weeks
to accept your landlord’s
offer. It’s during this time
that you’ll need to arrange
a mortgage or loan, get a
survey and hire a solicitor.
Get independent financial
and legal advice (if you
haven’t already) and check
you understand all the costs
before you sign anything.
6
Complete
the purchase
Once you’re happy with your
landlord’s terms and have
arranged how you will pay
for your home, carry on and
complete your purchase.
It’s usually during this time
that you pay your stamp duty
etc. finalise the paperwork
and sign the contract.
You are now a homeowner!
*If you’re not happy
with the valuation
you can appeal.
What to do if your landlord doesn’t meet the timescales
Buying a home can be a long process and can take several months. Your landlord must process
your Right to Buy application within certain timescales (shown in the diagram). If they
don’t meet these timescales or delay without reason, you could get a reduction
in the sale price. Find out more about delay notices on www.communities.gov.uk/righttobuy
16
17
Guide to completing your
application form (RTB1)
If you think you are eligible and feel ready to apply for the Right to Buy,
you need to fill out the RTB1 application form.
You can download it at www.communities.gov.uk/righttobuy on the
‘How to apply’ page or get one from your landlord. Make sure you have
the following information to hand before you fill out your application
form. Our Right to Buy advisers can help you complete the form. See
page 20 for their contact details.
Part A
The property
Part C
Qualification and discount
The full address of the property
you want to buy
Remember to include the area where
you live and the full postcode.
Details of your current
and previous tenancies
You will need dates, names of tenants,
addresses and name of landlord for
your tenancies. This includes those of
your spouse/civil partner, those of your
former spouse/civil partner who you
have separated from/ divorced, or who
has died, and parents who previously
held the tenancy.
The name of your landlord
For example Basildon Council.
Part B
The tenant(s) and family
member(s)
The full names of everyone listed on your
tenancy agreement (or ‘rent book’)
For example RICK SMITH would probably
be RICHARD JAMES SMITH. Remember
to tick the boxes to say whether the
property is each tenant’s only or principal
property, and if they wish to buy. On
joint tenancies, not all tenants may wish
to buy.
Details of any other properties you have
bought under the Right to Buy scheme,
or at a discount through any other
Government scheme, for example
Right to Acquire
You do not need to give details of
applications, only purchases.
The full names of family members who wish to
share the Right to Buy with you
They must be a spouse, civil partner or
wider family members and over 18. Wider
family members can also join in but they
must havelived in the property as their
main home for at least the last 12 months.
Part D
Previous discount(s)
Details of any discount previously
received under the Right to Buy
You might get a slightly lower
discount if you have purchased
through Right to Buy on another
home. Include details of address of
the property purchased, name of
landlord and date of purchase.
Part E
Tenants’ improvements
Details of any improvements you have
made whilst living in the property
The improvements may have
increased the value of the property.
If you list them in your application,
the value of the improvements will
not be included in the valuation of
the property so you don’t pay twice.
Questions to ask
yourself before you buy
Do I have the Right to Buy?
Before you start this process use the
checklist on page 4 to see if you might
have the Right to Buy.
Can I afford it?
Use the checklist on pages 14 and 15 to
work out the costs, benefits and possible
drawbacks of buying. It’s worth doing this
before you get too far into the process.
Can I afford it if things change
in the future?
Remember that your home could be at risk
if you’re not able to keep up your mortgage
or loan repayments. So work out your
budget, don’t over-extend yourself
financially and make sure that you have
some savings set aside for a rainy day.
What are the benefits and risks?
Part F
Signatures
Signatures of all tenants
Make sure all tenants sign in the
correct place. On page 10, the first set
of boxes are for family members who
are not tenants but want to share the
Right to Buy. The second set of boxes
on page 11 are for tenants who do
not wish to share the Right to Buy.
Owning a home can be a good investment
for the future, and gives you more freedom
to make your home your own. But make
sure you’ve also considered the risks and
responsibilities.
Where can I get advice?
See page 20 for contact details of
organisations that can give free and
unbiased advice on buying your home.
See back for
more useful
contacts
Once you’ve completed and signed the form, send it to your landlord.
18
19
Where to get the advice you’ll need
Useful contacts
Buying a home can be exciting but there is a lot to think about. Your landlord can help you
with part of the process, but you need to arrange other parts (such as finances) yourself.
The Government works with a number of organisations who provide free and unbiased
advice and can help point you in the right direction.
To find out who your landlord is, look for contact details on a recent letter or newsletter.
Right to Buy Agent Service
Buying a leasehold property
The Government’s Right to Buy Agent
service offers free and impartial advice on
Right to Buy and, if you decide home
ownership is the right choice for you, can
help you through the process of buying
your home, including providing information
on finding a mortgage, appointing a
solicitor and arranging a survey. You can
get in touch with a Right to Buy adviser by
phoning the helpline to get started, or, if
you’ve already begun the Right to Buy
process, to take the next steps.
The Leasehold Advisory Service (LEASE)
provides free, unbiased advice on leasehold
properties, including guidance on service
charges and ground rent.
Telephone: 0300 123 0913
www.communities.gov.uk/righttobuy
Money advice
The Money Advice Service is an independent
organisation set up by government.
Telephone: 0207 383 9800
www.lease-advice.org
Stamp duty
For information on stamp duty and the
latest rates go to:
www.gov.uk/stamp-duty-land-tax-rates
General Right to Buy information
Visit the Government’s dedicated Right to
Buy website, with eligibility quiz, discounts
calculator, application form and guidance,
delay notices and further information.
They provide free, impartial advice on a
www.communities.gov.uk/righttobuy
range of financial matters. This includes tips
and tools to help you budget, choose a
Not eligible for Right to Buy?
mortgage and work out whether you can
For information about other government
afford monthly repayments.
home ownership schemes visit GOV.UK at:
Telephone: 0300 500 5000
www.gov.uk/affordable-home-ownershipwww.moneyadviceservice.org.uk
schemes
Published by Department for Communities and Local Government. ©Crown copyright 2014. Product code 978-1-4098-4273-6.
Printed in the UK, July 2014, on paper containing 50% recycled stock.
20
1
www.communities.gov.uk/righttobuy